VIT43920 | Specific issues: relocation expenses

Many employers help employees or future employees to move house nearer their new job. This help can take many forms and might include paying for:

• estate agents fees

• the removal firm’s charges

• maintenance and gardening at an employee’s former property while it is up for sale

• short term accommodation in a hotel

The employer can treat the VAT on these costs as input tax if this spending is linked to the relocation. The Supply of Services Order should not be applied.

In principle there might be an output tax charge because of private use by the employee. However, because such private use is incidental to the business use, no such charge will arise.

If the expenditure is not linked specifically to the relocation but forms part of the ongoing living expenses at the new property then it is not input tax. So a claim for input tax on the cost of new bespoke curtains or carpets for a new house is acceptable because it is a normal expense of moving house. A claim for input tax on the cost of a new stereo system would not be acceptable because the cost is unrelated to the relocation.